Factoring and VAT: the CJEU changes the operational framework
In his in-depth analysis in NT+ Diritto | Il Sole 24 Ore, our partner Domenico Ponticelli analyzes the recent judgment C-232/24 of the EU Court of Justice, which confirms the VAT liability of factoring and redefines the boundaries of the exemption for financial services.
The CJEU extends the assimilation of factoring to debt collection, including all its forms—even non-recourse factoring—and limiting the scope for interpretation that, in Italy, had previously allowed many transactions to be classified as financial exemptions.
This approach requires a rethinking of operating practices: from factoring fees to flat-rate components, from pro-rata effects to implications in cross-border transactions.
However, the ruling does not exclude that mere cash advance transactions — without management activities — may remain exempt, confirming the centrality of case-by-case functional analysis.
In his in-depth analysis in NT+ Diritto | Il Sole 24 Ore, our partner Domenico Ponticelli analyzes the recent judgment C-232/24 of the EU Court of Justice, which confirms the VAT liability of factoring and redefines the boundaries of the exemption for financial services.
The CJEU extends the assimilation of factoring to debt collection, including all its forms—even non-recourse factoring—and limiting the scope for interpretation that, in Italy, had previously allowed many transactions to be classified as financial exemptions.
This approach requires a rethinking of operating practices: from factoring fees to flat-rate components, from pro-rata effects to implications in cross-border transactions.
However, the ruling does not exclude that mere cash advance transactions — without management activities — may remain exempt, confirming the centrality of case-by-case functional analysis.